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Month: November 2016

I have read “In the Garden of the Beasts” and am aware that vigilance is appropriate. Trump has said so many bad things during the course of his campaign that all manner of worry and concern is justified. The incidence of prejudice attacks and speech has increased post-election. It came from somewhere; and that somewhere is a dark place we all hoped had gone the way of smallpox.

However, we need to pause and think where we place our outrage. Recognizing that the NY Post did endorse Trump, the following article is worth a read:

Their point, essentially, is that this is a weak story. If, aided by George Takei (of Star Trek fame), the mainstream media is reaching internment camps from this starting point, it is going to sacrifice yet more of the credibility it has already depleted in the ‘echo chamber period’. There are only so many strawman arguments that can be had (and Trump’s campaign has seeded many) before the mainstream media becomes a house of straw itself and cedes readership to the blogosphere.

If Trump begins to implement some of the awfulness his campaign presaged when he is actually President, there will be substantive reason for the outrage. Resistance, if that is what is warranted, must be well designed and strategically planned. In the meantime, people ought probably to stop posting “Not My President” to FaceBook.

The mainstream cannot, as Dave Pell put it so well in his “Next Draft” summary of November 21, 2016, crowdsource its editorial judgement. He was referring to the furore over President-elect Trump’s tweet demanding an apology to Mike Pence from the cast of Hamilton, but he could have added this story to the mix.

It seems we may still be experiencing the after-shocks of the campaign and post-campaign. The interview with the NY Times is a great example of this. It was scheduled, canceled by Trump out of what seemed remarkably like petulance and then rescheduled. It took place and Trump said he had great respect for the NYT but had found their coverage ‘rough’; said he would not pursue Hillary Clinton or the Clinton Foundation; had an open mind on Climate Change; and suggested people would be very happy with his first amendment stance. What next? Maybe he will nominate Mitt Romney as Secretary of State (#burythehatchet)…..

This is for my good friend and fellow parishioner, Janet D. Janet, you are kind enough to admit that you occasionally read my blog posts. You have asked whether I have been writing in this tortured period of election politics. The answer is that I have, but on the private side of the firewall that separates my journal from my blog.

So, crossing over to the public side, here you go.

I was saddened by the outcome. I really disliked the Trump campaign. I need not repeat the reasons – they are well known. I had managed to convince myself that Hillary was a supportable candidate who deserved to win. I was good with that. I loved the fact that we were going to have a female president (#overdue) and I loathed what I saw as a clear double standard in many of the critiques of Hillary.

She was the better candidate, in my opinion (and that of 61 million Americans). But she was not a great candidate. The values she stood for were very much aligned with the Christian values we share and that Bishop Dietsche set out in his recent letter to the parishes in the Diocese of New York:

I would not have been nervous and fearful as I now am if Hillary had been elected. I would not have been fearful about the safety of those whose rights and concerns have been lifted up over the past 8 years. I would have been more hopeful about improvements in women’s lives. I would have been hopeful about continuing focus on climate change.

However, I believe that the forces of the progressive left – I hate labels but that will have to do for now – have a large measure of responsibility for the position in which we now find ourselves. The near obsession with shutting down speech that has been deemed offensive; the celebration of safe places in which one can hold one’s politically correct views without fear of being challenged or triggered have created something of an echo chamber in which all are in agreement. Within this echo chamber all adherents are affirmed and all who are outside are just wrong. The news media, also, on the whole, horrified by Trump, provided further affirmation for this echo chamber. The polls took the pulse of the world according to the respectable news media and found it to be healthy.

Settled upon the chosen candidate and affirmed in our belief that what was right was good and that Hillary ought to be elected, we marched to victory.

Along the way, we managed to convince ourselves that, because Hillary was our choice, she was a good choice – the best choice in fact. But she really wasn’t. People hated the email and the inside the beltway politics as usual. We all knew she was not inspiring, but we told ourselves we were done with inspiring. Competent, detail-oriented, serious, committed to worthy things would do.

Not enough. We needed a better candidate who could appeal more broadly to the WWC (white working class). WWC did not enjoy being referred to as deplorable – who does? Labels are the language of division and we were (are) divided enough. Not enough inspired, enthusiastic support; too much hatred. Hate trumped “good enough”.

So now we have to pray that this new president clears away the brush without starting a forest fire we cannot contain. We have to pray (and take appropriate action to ensure) that the institutions of our democracy are robust enough to contain the worst potential excesses of a Trump administration.

We have to try to recover some civility and mutual respect in our national discourse because courtesy, respect and civility are the necessary ingredients of the infinitely connected lives we all lead (#ubuntu).

I recently posted the following to “TheMarketMogul” , a relatively new publication. It was a different experience – my first of being subject to editorial review before publication….

Here is the link: http://themarketmogul.com/financialisation-and-politics/

I have reposted below for convenience, but the site is worth a look.

In George Monbiot’s How Did We Get Into This Mess, he discusses the failure, as he sees it, of Neo-Liberalism. As one considers the history of the financial crisis and the talking points it has provided for the candidates in the recent Presidential election in the United States, it is a subject worth pondering – an emerging theme.

Friedrich Hayek’s The Road to Serfdom has some great insights. Capitalism, he says, is very much aligned with human nature: it relies on the creativity of the majority outside the government to figure out, in the free market, the best allocation of resources. Friedrich Hayek details the deep flaws of five-year plans and the tendency of a centralised government to gather ever more power to itself to reinforce its goals and, when they go awry, to cover up the mistakes. Remember the time he was writing: WW2, fascism, totalitarianism, the rise of communism. He correctly describes the tendency of socialism to evolve into totalitarianism.

Markets Compromised

Hayek’s insights are as relevant today as they were when he was writing. However – and there is a risk that this sounds like the same apology that socialists made that the system was never properly implemented – the problem is that Friedrich Hayek’s philosophy depends on free markets. In many areas, the scales are tilted. People, whether in government or the private sector, have a tendency to want to accumulate power and protect it. Monopolies are a good example. Libertarianism deals very specifically with this, setting out certain areas where monopolies are indeed more efficient and must, therefore, be regulated. The book Winner Take All Politics describes how the system is “rigged”. It talks about how, traditionally, trade unions have provided a counterweight to the power wielded by corporations over workers and that the demise of unions has been to the detriment of workers. In this sense, the Bernie Sanders diagnosis has a lot of truth to it.

There is lots of good diagnosis and remarkably few prescribed cures. If you want to know why people are having a hard time getting things done in the US, take a look at a book called Ratf***ed. The argument is not that the Democrats are free of blame – rather that the Republicans have done a very good job of doing a very bad thing.

Even someone who has benefited from the financialisation of the last 30 years may feel ambiguous about all this. The Hayek model is appealing and receives wide support in the financial community, a community that aligned closely with Thatcherism and Reaganism mostly out of self-interest. Even within this community, though, there are many who, thinking about the next generation making its way in the world (frequently advising career paths outside financial services), are pausing to reflect and find it hard to ignore the anger of those who have been left behind. Support for President-Elect Trump was born out of this anger.

Playing Into Biases

Trump, Clinton and Sanders certainly polarised the electorate and it has been hard to distill the distinct arguments from the passions surrounding the campaigns. There is undoubtedly a tendency to select information that confirms biases. The discussion between the media and elite bubbles is currently heated. Perhaps, a letter-writer to the NY Times suggested, the NY Times should stop telling people what to think and how to behave and report more of how people are feeling and behaving.

Exploring opinions from all sides is important but requires discipline and a willingness to hear points of view that may change one’s own. The credibility of the writer is, of course, important. The books “Winner Takes All Politics”, “Makers and Takers” and “Ratf***ed” are well written, well researched and, while not without a point of view, cannot be dismissed easily. The book “Hillbilly Elegy” is an important insight into a social group very foreign to those not familiar with Appalachia.

The ultimate challenge is to figure out how to create a playing field that is sufficiently level to embrace a broad distribution of wealth. If there are too many people in the cart and no-one to pull it, the cart falls over. The purpose of economic growth cannot be an unfocused celebration of the path without any idea of where that path leads. The greatest good for the greatest number sounds great provided there is clarity about what “good” is. It does, of course, imply something of an enlightened elite to promote the greater good.

As the recent election in the US shows, there is tension between elites and others. “WWCM” (white, working class males) have clearly found a voice in this election. Traditional party affiliations are shifting. Those policymakers ignore this at their peril. Enlightened self-interest should inform our behavior and shape our actions. Enlightenment may need a little more attention.

What Markets Are Signalling

Traditionally, the financial markets have been thought to provide an objective point of view, reflecting the enlightenment of millions of transactions, millions of decisions about current events and their implications for the future. Monbiot asks people to consider that this point of view may not be as representative as it should be of all the viewpoints one needs to achieve a balanced assessment of how well the economy is doing for all its stakeholders.

Financialisation is the term used to describe how the markets may have lost their way in their mission to aggregate and disburse capital to productive ends. One key data point is that, over the last decade, factoring in dividends and buybacks, net equity issuance has been negative $416bn per year. Main Street, in other words, has been starved of equity capital as this capital has been returned to the financial sector. Has corporate America become too much in thrall to the short-term concerns of its shareholders and forgotten how to build long-term shareholder value, valuing and investing in all capital including its human capital?

Another academic, Thomas Philippon, discusses the cost of financial intermediation and notes that its cost has remained remarkably stable for over a hundred years: 2%. The implication that rent-seeking behavior in the financial sector has been at work for many years is clear. Given the fact that most large banks and investment banks are currently valued at below liquidation value (pace Trump rally), it suggests there may be room for disruption – hence the Fintech ‘revolution’.

In conclusion, Monbiot has a point. Financial markets can go awry, banks can do very bad things absent thoughtful regulation and well-designed incentives, corporations need to pay attention to a more diverse set of interests than just those of the capital markets and politicians must pay attention to leveling the field of play to ensure the market, broadly defined, can do its job in distributing wealth and avert the need to re-distribute through taxation.

The assumptions that markets are the best arbiter of economic outcomes, that thoughtful government policy always represents unwelcome interference need to be questioned without fear of being labelled a liberal heretic. If people fail to pay attention, there are more surprises ahead.